SUVA, 03 JULY 2019 (ISLAND BUSINESS)—As the global trade environment pushes further into uncertain territory, Fijian exporters are being urged to take advantage of what Papua New Guinea has to offer.
In a presentation to local businesses, ANZ economist for Pacific Island countries Dr. Kishti Sen said PNG could become the “China of the Pacific” as the next decade looks promising for the resource-rich powerhouse.
And as uncertainty reigns in the global markets, PNG looks likely to provide a more stable destination for Fijian goods.
“Several mega projects in the oil and gas sector and mining are expected to commence early next decade and the new Prime Minister is unlikely to change project timelines as he has indicated that he will work with the private sector to deliver strong outcomes for PNG,” Sen said.
“Any changes to the country’s resource legislation won’t be implemented until 2025, meaning that current projects will be subject to existing laws which should minimise delays.”
Other sectors of the PNG economy are also forecast to rebound as the new government targets the strengthening of the country’s huge potential in the agriculture sector.
“Three assistant ministers responsible for coffee; cocoa, copra and palm oil; and livestock will be appointed this week to support the Minister for Agriculture. The upshot is that we see [the PNG economy] rebounding this year as gas exports return to capacity following earthquake-induced disruptions in 2018 and maintaining the strong growth momentum into the 2020s,” said Sen.
ANZ is forecasting Fiji’s economy to drop to below three percent over the next two years as the government gradually tightens up on expenses.
This will coincide with a slowing global growth that is being affected by major developments such as the on-going trade and technology war between the United States and China, Britain’s proposed exit from the European Union, the United States’ sanctions against Iran as well as what is perceived to be an unpredictable scenario playing out between U.S and North Korea in terms of the latter’s nuclear aspirations.
While this is expected to affect major trading partners and give Fiji some breathing space in which to recover before positioning itself for the next cycle of strong global growth, the country is still faced with balance of payment issues that is directly affecting the status of foreign reserves and liquidity in the banking system.
Foreign reserves fell by FJD$260 million (US$121.3 million) in 2018 as a result of efforts to finance the current account deficit and the resulting drop in liquidity has pushed up the cost of credit which is expected to put a brake on import demands, said Sen.